05/24/2013
Regional Job Growth Helps Ward off Another Spring Swoon
Over the course of the relatively lethargic labor market recovery, both regional and national labor markets have made painfully slow, but fairly steady, improvements in the pace of job creation. However, for the three years prior to 2013, there emerged a phenomenon many have come to label a “spring swoon,” whereby in the spring/summer of every calendar year since 2010, headwinds—or specters of headwinds—have appeared, at least for a short time, that made many fear the bottom could be falling out of the economic recovery. With headwinds aplenty over the last few years, one can’t be blamed for being a bit cautious in the wake of some uninspiring economic data reports.
But—cross your fingers—maybe there’s a little less concern about a dip in labor markets this spring. Maybe this time, in 2013, regional labor markets are a bit more resilient after a few years of painful realignment.
Through April, the states in the Sixth Federal Reserve District have added roughly 127,000 net new jobs, according to data from the U.S. Bureau of Labor Statistics (BLS). Before we begin to cheer a possible end to the spring swoon phenomenon, however, we should check out a recent Wall Street Journal blog claiming the entire concept is a myth brought on by changing hiring patterns, a misaligned seasonal adjustment procedure by the BLS, and weaker hiring by small businesses.
Let’s take a look back at these so-called swoons. Although not a spring swoon, Sixth District states collectively shed 61,500 payrolls from June to September 2010. The sputtering regional labor market found more solid ground after September 2010 and carried over some momentum into 2011. Then in May and June 2011, the region shed 25,000 payrolls over the two-month period. However, the sharp downward lines on my graphs turned the other way, and fears were once again alleviated, at least temporarily.
But then in 2012, in another twist of fate, when economists were watching with near anticipation for the seasonal dip to return, the swoon reared its ugly head once again. Fortunately, this was the least dramatic one since the recession. Jobs were shed in May and July 2012 to the tune of 11,600 payrolls in the Southeast before returning to a positive trajectory.
Once again, earlier this year, as one might suspect, many economists were wondering if we would see another swoon. In fact, some preliminary data from the BLS had many believing more of the same was surely on the way, but with upward revisions announced on May 3 by the BLS reflecting a much more positive labor situation for March and April than was originally reported, major newspapers began running headlines such as “Investors Throw Off Fears of Spring Swoon.”
And now, this hopeful warding off of another spring swoon nationally seems also to be materializing in Sixth District labor markets. In April 2013, Sixth District states added a net 32,400 new jobs, after tacking on 36,000 in March. Additionally, though the size of each state’s contribution varied, every state in the region added payrolls in April.
Where and what kinds of jobs?
Florida has led the way in payroll growth over the last two months within the Sixth District, adding nearly 25,000 payrolls in March and 17,000 in April. Importantly, the gains were broad-based: retail, financial activities, professional and business services, and leisure and hospitality sectors have helped the Sunshine State bounce back with vigor over the last two months. Construction (+12,500 payrolls for March and April) and real estate (almost +4,000 new payroll jobs for March and April) reflect an ongoing rebound in the housing sector. Add to this the fact that Florida is one of only a few states where there is considerably less of an employment payroll drag from the government sector.
As a native Georgian, I have become accustomed to being one or two pegs below Florida in everything from the alphabet to college sports, so it’s not too surprising that Georgia has undergone the second highest rate of payroll creation over the last two months within the Sixth District. A few noticeable differences exist between the makeup of the new jobs in these two states, though. In Georgia, construction jobs are making their way back into the fray at a much slower pace than Florida (+2,000 for March and April), while payrolls in the real estate, rental, and leasing industries have been flat over the last two months of data. Leading the way in the Peach State is professional and business services, as industries in those sectors have added 12,000 payrolls over the last two months, March and April.
Still, 7.5 percent unemployment isn’t exactly something to celebrate
There was more news in last week’s regional employment report from the BLS. Much like how the BLS conducts two national surveys each month (one to calculate the change in payrolls, the other to calculate the unemployment rate), so it does on a regional level. In the April 2013 Regional Report, we discovered that an aggregate of Sixth District states now has the same unemployment rate as the rest of the nation for the month of April, 7.5 percent. While this may not yet seem like the time to uncork the champagne, it is worth noting that the Sixth District’s aggregate unemployment rate had been above the national average since February 2008, just around the time that everyone’s labor market nightmares began coming true.
Other significant changes in unemployment rates for the Sixth District in April included drops of 0.3 percentage point in Alabama, Florida, and Mississippi to reach 6.9 percent, 7.2 percent, and 9.1 percent, respectively. Louisiana, though it tacked on 0.3 percentage point to its unemployment rate in April, remains the lowest unemployment rate in the Sixth District at 6.5 percent. The chart below shows the historical trends for the Sixth District unemployment rate, the national rate of unemployment, and unemployment rates for each of our Sixth District states.
By Mark Carter, a senior economist analyst in the Atlanta Fed’s research department
May 24, 2013 in Jobs, Labor Markets, Southeast, Unemployment | Permalink
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04/23/2013
Regional Employment Grew in March, Led by Florida and Georgia
On April 19, the Bureau of Labor Statistics (BLS) released the March regional and state employment and unemployment report. Data in the report show that Sixth District states added a seasonally adjusted 45,500 payrolls in March, and the aggregated regional unemployment rate dropped 0.1 percentage point, to 7.7 percent, with results generally positive across southeastern states (see the chart). The United States as a whole added 88,000 payrolls in March 2013, which means the Sixth District states accounted for a large portion of the national gain.
Notably, February payroll gains for the region were revised down by 11,800, to a new level of 29,800. Nonetheless, the three-month average employment gain for the region remained a healthy 34,500.
Sixth District highlights
- All states within the Sixth District with the exception of Tennessee added payrolls in March 2013 (see the table). The largest gains were in Florida (32,700, highest in the nation) and Georgia (13,600, third-highest in the nation).
- Leisure and hospitality (12,500) added the most jobs in Florida, followed by trade, transportation, and utilities (6,600) and construction (5,500).
- Payroll increases in Georgia came from professional and business services (6,700), trade, transportation, and utilities (4,200) and construction (3,100).
- Most of the sectors in Tennessee cut jobs over the month, with the leaders being professional and business services (down 3,300) and trade, transportation and utilities (down 2,400).
- Alabama, Louisiana, and Mississippi experienced only small increases in payrolls.
- The unemployment rate decreased in Florida (down 0.3 percentage point), Georgia (down 0.2 percentage point), and Mississippi (down 0.2 percentage point). It was unchanged in Alabama and increased in Louisiana (up 0.2 percentage point) and Tennessee (up 0.1 percentage point; see the chart).
By Neil Desai, a senior economic analyst in the Atlanta Fed’s research department
April 23, 2013 in Alabama, Employment, Florida, Georgia, Louisiana, Mississippi, Southeast, Tennessee, Unemployment | Permalink
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04/03/2013
Regional Employment Increases
The U.S. Bureau of Labor Statistics (BLS) released state employment and unemployment data on March 29 for the month of February. The news was rather good.
The report showed that Sixth District states added a net 41,600 payrolls in February, which is a stronger showing that January’s upwardly revised increase of 28,200. All states in the region added payrolls in February, with Tennessee (up 11,400) and Louisiana (up 9,100) leading the way.
Meanwhile, the aggregated unemployment rate for the region remained unchanged at 7.8 percent, with individual states’ results a mixed bag (see table below). The unemployment rate decreased in Florida (down 0.2 percentage point) and Georgia (down 0.1 percentage point), the two states that together make up almost 60 percent of the Sixth District’s labor market. The unemployment rate increased in the other states in the region.
By Neil Desai, a senior economic analyst in the Atlanta Fed’s research department
April 3, 2013 in Employment, Florida, Georgia, Southeast, Tennessee, Unemployment | Permalink
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03/05/2013
Behind the Numbers
We spend a lot of time going over economic statistics. Opening up a new economic report is rather like tearing through wrapping paper for me and my fellow data nerds (you know who you are). Some of the more important data reports we follow focus on labor markets.
The chart shows the aggregate unemployment rate for the six states in the Atlanta Fed’s region, as well as a broader measure of labor force underutilization—the so-called U6 measure calculated by the U.S. Bureau of Labor Statistics (BLS). The U6 rate consists of several groups: total unemployed, plus all marginally attached workers, plus total employed part-time for economic reasons, along with all marginally attached workers. The BLS provides U6 rates for individual states on a quarterly basis beginning in 2009, and annually from 2003. The chart begins in 2007, so the first two years only show annual calculations. I computed a U6 rate for the region by weighting the six individual states’ U6 rates by each state’s respective labor force.
The chart shows that the region’s unemployment rate stood just below 8 percent at the end of 2012, while the broader underemployment rate was just under 15 percent. These rates have come down from their recession peaks, but they remain well above prerecession levels.
Speaking of levels, and making these percentages more real, I also looked at how many people these percentages reflect. A regional unemployment rate translates into 1.8 million people, while the U6 regional measure represents a staggering 3.4 million.
Digging into these data is an essential part of the overall analysis because the exercise serves to remind me that there’s a lot that goes unseen behind the headline numbers.
Along those lines, Federal Reserve Vice Chair Janet Yellen’s recent remarks on unemployment struck a chord with me and my colleagues:
These [unemployment data] are not just statistics to me. We know that long-term unemployment is devastating to workers and their families. Longer spells of unemployment raise the risk of homelessness and have been a factor contributing to the foreclosure crisis. When you're unemployed for six months or a year, it is hard to qualify for a lease, so even the option of relocating to find a job is often off the table. The toll is simply terrible on the mental and physical health of workers, on their marriages, and on their children.
Speaking a day after Vice Chair Yellen, Atlanta Fed President Dennis Lockhart said:
There's an ongoing debate about the extent to which the causes of weak labor markets are structural or cyclical. The cyclical view maintains that the problem is just a deficit of aggregate demand and, with a quicker pace of growth, much of the problem will be solved. A sense of urgency is appropriate for this goal. If policymakers are too patient, what started as cyclical problems can evolve into structural problems. I think faster growth would indeed improve employment conditions significantly...
The “sense of urgency” that President Lockhart expressed is exactly what I feel when I look at the charts above. And to echo Vice Chair Yellen: these are not just statistics to me or my colleagues here at the Atlanta Fed.
By Michael Chriszt, vice president and community affairs officer in the Atlanta Fed's Public Affairs department
March 5, 2013 in Labor Markets, Unemployment | Permalink
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09/05/2012
A Closer Look at Regional Unemployment Rates
The challenges faced by regional labor markets have been well documented in SouthPoint over the years. Atlanta Fed President Dennis Lockhart has also spoken on this issue in his recent speeches, and macroblog has been all over this issue for some time.
One angle we have not fully reported on is the difference between unemployment in metro areas and non-metro areas. We can use non-metro areas as a proxy for rural areas, even though the U.S. Bureau of Labor Statistics (BLS) does not report specifically on rural unemployment. The U.S. Census Bureau does distinguish between rural and urban—it says an urbanized area of 50,000 or more people is urban, as is an "urban cluster," which has between 2,500 and 50,000 people. Rural, conversely, encompasses all territory not included within an urban area. To remain consistent with BLS definitions, we are going to use metro and non-metro to describe these two divisions.
To calculate the region's metro area unemployment rate, we totaled the labor force and unemployed for all metro areas in the six states of the Sixth District (Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee). To calculate the region's non-metro area unemployment rate, we simply subtracted the total metro area labor force and unemployment totals from state totals. We smoothed the data (because of month-to-month volatility) by using a six-month moving average to ascertain the underlying trend.
Chart 1 shows that unemployment rates in non-metro areas in the Southeast have been and remain above the rates in metro areas. Our business contacts and friends in the community-development area have noted for some time how non-metro areas face significant labor market challenges. Of course, the fact that pockets within metro areas are equally challenged is well documented.
In addition, the metro-area unemployment rate tracks the total regional unemployment rate closely because the regional labor force is 84 percent metro and 16 percent non-metro.
Chart 2 reveals how the gap between metro and non-metro unemployment rates have narrowed over the last few years. In fact, by mid-2012, this gap had declined to its lowest since 2000, when the BLS began reporting labor force and unemployment data in metro areas.
Why this gap has declined in recent years is tied to the nature of the 2007–09 recession and weak recovery since the recession officially ended. The housing crisis had a major impact on cities—especially in suburban areas and along the region's metro area coastal areas, where the residential construction boom was significant. Rural areas were hit as well, but the lingering effect of the housing bust was most intense in metro areas.
An upcoming conference sponsored by the Federal Reserve Banks of Atlanta and Kansas City on workforce development will address some of the challenges faced by both non-metro and metro areas, as well as other important workforce issues that confront us today. Atlanta Fed President Dennis Lockhart and Kansas City Fed President Esther George will share their views, as will some of the nation's leading experts in the field of workforce development.
By Mike Chriszt, a vice president in the Atlanta Fed's research department
September 5, 2012 in Employment, Unemployment | Permalink
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06/18/2012
District employment increases modestly in May
The Sixth District as a whole added 9,000 jobs in May, following 9,600 new payrolls in April, and 18,900 in March, according to the U.S. Bureau of Labor Statistics (BLS). Alabama, Florida, and Georgia recorded payrolls increases while Louisiana, Mississippi, and Tennessee reported payroll decreases. Georgia was primarily responsible for the net positive District increase.
The District unemployment rate was unchanged at 8.3 percent in May. The unemployment rate decreased in Florida and Mississippi and increased in Alabama, Louisiana, and Tennessee. The rate was unchanged in Georgia.
While the pace of job growth remained tepid in May and deeper declines in unemployment have been elusive, the region continues to slowly move in the right direction. Our business contacts continued to be conservative in their approach to hiring and appear likely to remain so—at least in the short term.
By Neil Desai, a senior analyst in the research department of the Atlanta Fed
June 18, 2012 in Jobs, Unemployment | Permalink
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01/20/2012
Initial unemployment claims head down, slowly
The idea that regional labor markets are healing is supported by the following chart:
Because initial claims are a sign of emerging unemployment, we can say that declines are a sign of an improving unemployment situation—or, more precisely, of an employment situation that does not appear to be getting worse. That the initial claims are headed in the right direction is clear, but what is also evident is that we are still nowhere near pre-recession levels. In fact, the current level for the region is still 55 percent higher than it was in January 2006. This table shows the percent changes for individual southeastern states:
Florida's level is well above its January 2006 reading, as are the levels of Alabama and especially Georgia. Louisiana, Mississippi, and Tennessee's levels are about 20 percent over their January 2006 readings. In fact, these latter three states have seen initial claims drop at a faster rate than the nation.
As a whole, the region's levels are still above comparable U.S. figures. Nevertheless, despite the wide divergences in the region, the initial claims of all southeastern states are moving in the right direction.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
January 20, 2012 in Unemployment | Permalink
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04/05/2011
Employment in the Sixth District improves in February
Payroll employment in the Sixth District improved in February, following several weak months. All states in the district added jobs in February, led by Florida and Georgia, the district's two largest labor markets. Across the nation, 35 states increased payroll employment in February.
In the district's largest labor market, Florida's education and health care sector gained 11,400 jobs in February while construction added 4,400 jobs. Industries that also contributed to the monthly gain in Florida were manufacturing, information services, and other services. A recent SouthPoint post gave a more detailed look at employment in southwest Florida. Accounting for the bulk of February's job gains in Georgia were the trade, transportation, and utilities industries, which added 6,900 jobs, and construction, which added 5,000 jobs. Payroll gains in the other Sixth District states over the month were spread among several industries.
Meanwhile, household survey data from the U.S. Bureau of Labor Statistics showed that the unemployment rates in the district were little changed in February. The unemployment rate decreased in two district states—Florida and Georgia—and increased in three states—Louisiana, Mississippi, and Tennessee. Florida's unemployment rate continues to be the highest rate in the district and the third highest in the nation. All Sixth District states except Louisiana have unemployment rates above the national unemployment rate of 8.9 percent.
By Sandra Kollen, a senior economic analyst in the Atlanta Fed's research department
April 5, 2011 in Employment, Florida, Georgia, Unemployment | Permalink
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10/20/2011 at 10:08 PM
07/28/2010
Regional labor markets continue struggle
Similar to the national employment report for June, the regional employment report showed a loss in payroll employment for the month. According to the U.S. Bureau of Labor Statistics' establishment survey, the Sixth District lost 26,800 jobs in June after adding 77,400 jobs in May (see chart 1). Job losses in most District states were affected by the end of Census-related temporary jobs. For the United States as a whole, 125,000 jobs were shed in June, reflecting the end of 225,000 temporary Census jobs. Private payrolls in the District have increased over the past few months, albeit at a slow pace. In June, the District added only about 17,000 private jobs.
Looking at another labor market indicator, we also see a slight improvement in the sluggish labor market. In the U.S. Bureau of Labor Statistics household survey, June's unemployment rate decreased in all District states except for Louisiana, where it increased slightly that month. Despite the easing of the unemployment rate, all states in the District have unemployment rates above the national rate of 9.5 percent with the exception of Louisiana, which has an unemployment rate of 7 percent. Much of the decrease in the unemployment rate during the past few months is attributed to a decrease in labor force participation.
To gauge employment's short-term trend versus its long-term trend, employment momentum can be examined through the use of bubble charts (see chart 3).
The employment momentum chart simultaneously plots both short- and long-term employment trends as well as states' total employment share. The vertical (Y) axis measures short-term trends (three-month average annualized percent change). The horizontal (X) axis measures long-term trends (year-over-year percent change). The size of each state's bubble reflects its relative share of total employment among the six measured states.
The position of a state's bubble in a quadrant—the intersection of the state's short- and long-term plot—reflects its employment momentum by using four quadrants that indicate certain situations:
Quadrant 1: Both short- and long-term employment growth are positive. (The higher in the right-hand corner of the chart a state's bubble appears, the stronger the state's employment momentum.)
Quadrant 2: Short-term growth is negative, but long-term growth is positive. (Recent data point to slipping employment momentum.)
Quadrant 3: Both short- and long-term employment growth are negative. (The lower in the left-hand corner of the chart a state's bubble appears, the weaker the state's employment momentum.)
Quadrant 4: Short-term growth is positive, but long-term growth is negative. (Recent data point to improving employment momentum.)
In June, the employment momentum of the Sixth District states is positioned in the improving quadrant, so although long-term growth is still negative, short-term growth is positive. Some states were even entering the expanding quadrant in June. If we take a look back to where the Sixth District was in January (see chart 4), all District states were in the contracting quadrant with both short- and long-term employment growth negative. Although these indicators point to improvement, they show that the labor market in the Sixth District still has a ways to go before getting back to where it was prerecession, with state bubbles in the expanding quadrant and lower unemployment rates.
By Sandra Kollen, a senior economic analyst in the Atlanta Fed's research department
July 28, 2010 in Louisiana, Recession, Unemployment | Permalink
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02/24/2010
Regional labor markets: Some initial signs of improvement
In a speech last week to the Augusta Metro Chamber of Commerce, Atlanta Fed President Dennis Lockhart said that inventory replenishment and business spending are keys to unlocking the trajectory of the economic recovery. He added that:
"The third and maybe most important factor I'm watching is the labor market. I expect a very slow recovery of employment markets and, therefore, a slow decline of the unemployment rate. But it's worth noting that as the recovery got under way in the second half of last year, businesses relied on productivity enhancements to expand production and were able to defer hiring.
"A shift from productivity-driven expansion to jobs-driven expansion could materialize as benefits of earlier cost and head-count reductions reach their limit. The additional hiring that would follow would likely improve business and consumer confidence and feed a virtuous cycle."
There is little hard data showing a turnaround in the regional labor market, in part because most state-level labor market data from the Bureau of Labor Statistics are only available through December (January data will be released March 10). However, we do see evidence that job losses tapered off. For example, initial claims for unemployment insurance continue to decelerate:
In addition, the number of job losses declined steadily throughout 2009:
Anecdotal information is mixed as well. Temporary help agencies in the Southeast noted an increase in job orders in January and early February. Yet, according to our business contacts as a whole, overall job creation remained tepid. Businesses continued to describe attempts to do more with less, such as combining the duties of several jobs into one.
The Chicago Fed's Bill Testa blogged on the Midwest economy last week and noted another useful indicator that can bridge the gap between official releases from the BLS. Bill writes:
"The Conference Board tracks national and state online job vacancies on a monthly basis. Their recent release reports a third consecutive month of strong national gains in advertised vacancies. Their recent release reports a third consecutive month of strong national gains in advertised vacancies. The gains were widespread across U.S. regions, including the Midwest."
Southeastern states also saw increases in January from December in the total number of online job vacancies.
President Lockhart concluded his remarks on the outlook in Augusta by saying:
"I expect businesses to be very cautious with respect to inventory accumulation, capital spending, and hiring. But I will be watching carefully for signs that an alternative, faster-growth scenario is developing."
Through February, we see little evidence that a faster-growth scenario is building in regional labor markets. We are hopeful that the positive signs we see in temporary employment increases and in job advertisements in the region feed through into measurable job gains, but as of now we continue to expect a very slow recovery in employment.
Michael Chriszt, an assistant vice president in the Atlanta Fed's research department
February 24, 2010 in Labor Markets, Productivity, Unemployment | Permalink
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It is a good news to all. I hope the employment rate remains steady as we can no longer afford the slump of the hiring industry as it will lead to recession.